You have undoubtedly heard about the important role a customer data platform (CDP) plays in creating customer-centric marketing, sales and customer service within your organization. With the continued move away from using third-party cookies and data, these platforms are helping organizations implement a first-party data approach. While the term CDP is used frequently, there are many different definitions and combinations of features that these platforms use.
Rather than a single tool or product, I like to define a CDP as a set of features and functionalities that encompass five key areas:
- Unified Customer ID.
- Customer Segmentation.
- Analysis and Recommendations.
Several CDPs have robust capabilities across all of these areas. Some are more focused on a specific feature set. Therefore, products that call themselves “CDPs” may not cover the full spectrum of the above categories.
As a consultant, I am often brought into organizations to help them assess what type of CDP will work best for them. A method to categorize their features and benefits is a big help here. In this article, I’m going to discuss the five primary components of a customer data platform, so you can better understand which portions you may already have covered, and which you may need to augment.
Unified Customer ID
The first component we’ll discuss is arguably one of the most talked-about features of a CDP. With so many different marketing and data platforms used by an enterprise, one of the biggest immediate challenges that customer data platforms are called on to solve is unifying all of the disparate third-party, first-party (behavioral information collected directly), and zero-party (information proactively provided by a customer) data into a unified profile with a common identification number or code.
With this in place, your CDP becomes your system of record for customer profiles, integrating with all customer touchpoints and ingesting their data. A CDP should also be able to deduplicate both known (individual customers who you have a customer ID for already) and pseudonymous (individual customers that you haven’t yet associated a name or personal information with already) users. Getting this unified customer ID is a great reason to invest in a customer data platform.
Related Article: Is That New CDP Truly a Customer Data Platform?
The next component of a CDP is enabled once you are able to have those unified customer IDs we just discussed. While direct, one-to-one personalization and communication may be the “north star” for many organizations, good old-fashioned audience segmentation is still a very successful way to use your CDP customer data. Your CDP should have a way to both suggest new audience segments as well as to work within your predefined ones, though some platforms vary in their flexibility on these points.
A CDP can be your system of record for audience segments which can be used consistently across the enterprise. In many organizations, segments used for email marketing may differ from those used in advertising and retargeting, or other channels. While there’s often overlap, the inconsistency means that you aren’t offering a truly consistent experience to the customer.
Integrating with your CRM database, email service provider (ESP), data management platform (DMP), and others means that this audience segmentation will provide the best and most effective user experience across your multiple marketing and customer communication channels.
Analysis and Recommendations
This brings us to the question of what to do with all those unified customer IDs and standardized audience segments.
Your CDP should be able to take customers and segment data and provide an analysis of their behavior by channel, segment and stage in the customer or buyer’s journey. This analysis can then be used to provide recommendations for many things including content personalization opportunities, displaying a next best offer or action, or automatically triggering followup communications.
Some CDPs place more emphasis on profile unification and segmentation than on analysis and recommendations, though most provide at least some usable information in order to help determine what approaches your teams should take to engage customers and personalize their experiences.
Related Article: Curiouser and Curiouser: Drawing the Line Between DXP and CDP
As you would expect, with a CDP doing analysis and recommendations, it needs a way to share and visualize its learnings. CDPs are not sold as analytics and reporting tools per se, so often their ability to provide the following is limited:
- Audience segment performance.
- Customer journey analytics.
- Personalized content/offer performance.
Finally, we have the component in which there is probably the most variance between CDP platforms. Activation provides marketing channels with content and actions to implement the next best offer or action, or set of personalized content based on the individual or audience segment’s behavior.
While some have more robust features here, others adhere more towards showing and analyzing customer and segments without being responsible for triggering actions. In the latter case, it will be necessary to integrate with tools that support things like:
- A/B or multivariate testing.
- Content personalization.
- Customer Journey Orchestration (CJO).
- Integration or next best action (often referred to as integration platforms as a service or iPaaS).
Regardless of how much your CDP supports the activation component, it’s a necessary one to take advantage of all the benefits a CDP can provide for your organization.
Related Article: Understanding the Myths and the Realities of a True CDP
Which CDP Will You Choose?
As you can see, choosing the right CDP for your organization involves many factors. And in some cases you may license a product labeled as CDP only to need to augment some of those capabilities. Some of the above components may be higher priority than others, or some may be fulfilled by other systems. Still, other categories may require very specific types of integration that a specific CDP vendor cannot meaningfully accommodate.
Either way, it is clear that CDPs are here to stay. Best of luck with your CDP comparison shopping!
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